We are developing the social individualist meta-context for the future. From the very serious to the extremely frivolous... lets see what is on the mind of the Samizdata people.

Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]

Cry God for Harry, England, and Saint George!

Much beer will flow today…

Some questions about US politics…

I have been fixated on UK politics lately and have perhaps not given the ‘Trump and Russian Collusion’ affair the attention it deserves.

Simply put, if the report exonerates Trump and his administration of illegality (even if not fuckwitterly), would it be a fair characterisation to say the following things are true?

1. Trump’s protestation that he was being subjected to a witch-hunt by politically motivated Federal figures has been vindicated.
2. Trump’s more questionable actions were attempts to fight back against political enemies employing now debunked accusations.
3. No one is being prosecuted for trying to bring down a duly elected President with bogus charges.

Or have I got it all wrong? Educate me as I really have not been paying attention.

Samizdata quote of the day

To a great extent, the threat to free speech posed by iPlod will depend upon how its employees exercise their discretion and whether they’re politically neutral. Unfortunately, it will be staffed by the same sort of quangocrats that run the Advertising Standards Authority, the Equalities and Human Rights Commission and Public Health England, and we know from experience that these busybodies will use whatever powers they have to extend the reach of the nanny state. That nearly always involves enforcing left-wing orthodoxy, whether consciously or not.

Toby Young

Samizdata quote of the day

Just as Gutenberg’s printing press awakened the masses to the wisdom of the ancients, and the desktop computer put enormous computational power into the hands of ordinary people, low cost, off-the-shelf space technology is ushering in a new era of entrepreneurial ambition and human self-awareness. An audacity of spirit is sweeping the globe and small business’ ability to produce spacefaring individuals is altering the long arc of human history guided by an invisible hand of invention and adaptation. It is advances like these, placing new creative tools into the hands of empowered individuals and small groups, that have shaped our destiny as humans. Whether it be campfires, currencies, or corporations, nothing so profoundly shapes the destiny and evolution of humankind as those inventions that empower everyday people. Today we are bearing witness to this power being applied to the boundless frontier called space.

Charles Beames

Samizdata quote of the day

Canute’s point wasn’t that he could control the tides and waves. Rather, that fawning courtiers needed to learn the lesson of the limit to State competence. A thousand years later we’re still waiting for the lesson to sink in.

Tim Worstall

Corporate social responsibility – is it socialism by the back door?

“When I hear businessmen speak eloquently about the `social responsibilities of business in a free-enterprise system,’ I am reminded of the wonderful line about the Frenchman who discovered at the age of 70 that he had been speaking prose all his life. The businessmen believe that they are defending free enterprise when they declaim that business is not concerned `merely’ with profit but also with promoting desirable `social’ ends; that business has a “social conscience” and takes seriously its responsibilities for providing employment, eliminating discrimination, avoiding pollution and whatever else may be the catchwords of the contemporary crop of reformers. In fact they are–or would be if they or anyone else took them seriously – preaching pure and unadulterated socialism. Businessmen who talk this way are unwitting puppets of the intellectual forces that have been undermining the basis of a free society these past decades.”

Milton Friedman

If you want to wind up a certain kind of activist in the realms of modern investment, one of the quickest ways to get their pulse rate up is to quote the late Chicago economist above about what he thought was the sole responsibility of business owners. He stated that this was to maximise shareholder value. Period. To do anything else is tantamount to an act of theft:

“In a free-enterprise, private-property system, a corporate executive is an employee of the owners of the business. He has direct responsibility to his employers. That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to their basic rules of the society, both those embodied in law and those embodied in ethical custom. Of course, in some cases his employers may have a different objective. A group of persons might establish a corporation for an eleemosynary purpose – for example, a hospital or a school. The manager of such a corporation will not have money profit as his objectives but the rendering of certain services.”

This seems fair enough to me and stated with Friedman’s admirable clarity. The key is that the purpose of the firm is set by the folk who created it and those who own it. If it meets customers’ needs it will thrive, and if it doesn’t, it goes out of business. If you and I, dear reader, found a business to sell chocolate ice cream, at what point do we suddenly become “responsible” in some sense to “society” or “the environment” or “God” in how we run things unless we have expressly chosen to make those considerations part of our business mission?

It is crucial to be clear on this point. If a group of individuals band together to create a corporation that expressly states that it shall distribute 30 per cent of profits to a specific charity/cause, or that it will source its supplies from a particular group on ethical grounds, or hire as equal a balance of men and women as possible, regardless of other considerations, then anyone who becomes, say, a shareholder in that business cannot complain if things go wrong. And in fact there are more and more cases of firms that go out of their way to brandish their ethical principles, with varying levels of credibility or cant. Also it turns out that firms which are run by honest people, publish transparent accounts and don’t treat staff like crap tend, according to some metrics, to outperform their peers over the long term (see a study claiming this here). As Adam Smith might have noted, if people pursue their rational self-interest it tends to be the case that dealing with decent, honest people tends to work out better than dealing with shysters.

In my present working life I am bombarded with press releases and material from investment firms talking about the wonders of environmental, social and governance-related (ESG) investing, and also what is called “impact” investing (putting money to work to achieve a specific result, both financial and non-financial). To the extent that fund managers use their market muscle to achieve these goals in a free market rather than bring in the State to do their bidding, that’s all fine by me. After all, why should not, say, a libertarian fund management firm be able to state that it will refuse to invest in any business that knowingly produces services/products that threaten privacy and expand the reach of the state, such as firms that act as contractors to certain governments? (How about Classical Liberal Wealth Management Inc?) In other words, in this view the purpose of a firm or other legal entity is to enable the wishes of its creators to be brought about, whether making a profit, advancing world peace, spreading the ideas of Ludwig von Mises or whatever.

There will be investment funds that will want to focus on holding stakes in firms, be they listed, or unquoted, that focus 100 per cent on becoming more valuable and profitable no matter what else it does, because those investment funds’ clients expect and hope to fund a decent retirement, for example. In an ageing population, beset by growing strains on public finances, it is going to be difficult sometimes to square some of the supposed high-minded desires of corporate social responsibility activists with the desires of millions to have something to live on in old age. The point is that balancing those things must ultimately be the investors’ decision, not that of a government.

The issue becomes more problematic when government steps in. Firms that claim CSR is good for the shareholder in the long run may simply be rationalising what they have to do anyway by force of law. Investor pressure to save the earth as well as make money may be misguided in some ways, but at least it is not coercion. But things take a different turn when the state intrudes. An article here by Quinn Connelly makes this point well:

“Empirically speaking, the market has moved against Friedman’s philosophy. The largest firms in America and Britain spend more than $15 billion a year on CSR, and new research suggests this spending may create monetary value for companies. As The Economist concludes, “even if you accept Friedman’s premise and regard CSR policies as a waste of shareholders’ money, things may not be absolutely clear-cut.” Indeed, they may not be, but not for the aforementioned reasons. In the current environment, it may be rational for companies to adopt CSR policies in order to contend with regulatory and competitive pressure; however, this says little about the inherent value of the policies themselves, or the principles behind them. In fact, a cynic might point to the increase in CSR spending as an indicator of reverse regulatory capture, or merely as an exercise in public relations.”

To sum up, ideas such as ESG investing or corporate social responsibility can in some ways sit alongside an entirely free market view of the world, but I am wary. In a recent phone call, one advocate of these ideas talked about how “we are in an era of late-stage capitalism”. I pointed out to this person that such a term has been used as long as capitalism has been a word. The phone call did not go well.

Samizdata quote of the day

The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.

– Frederick Hayek, The Fatal Conceit: The Errors of Socialism

Book Review: Capitalism In America by Alan Greenspan and Adrian Wooldridge

Capitalism in America: A History. By Alan Greenspan and Adrian Wooldridge.

I recently read this book, published a few months ago, and it is written by a senior journalist who is political editor of the Economist, and former Federal Reserve Chairman Alan Greenspan. Given their respective occupations, I had a rough idea of their broad ideology (a general predisposition towards free markets, private property and limited government) and on the whole I enjoyed reading this book a great deal.

Their core thesis is that America has been as successful as it has been because it allows a great deal of “creative destruction” – new technologies and business models disrupt and replace older ones, causing pain for specific groups but big benefits for the wider population over time. America is so big, and people have traditionally been so willing to move around to find work, that the “creative” side wins over the “destructive”. They observe the back-and-forth process of how there have been periods of intense growth and upward progress, such as the post-Civil War boom, the rise of the great business tycoons such as the Rockefellers, and then the push-back of anti-trust and the Progressive Era, William Jennings Bryan and his “cross of gold” hysteria. We get the Roaring 20s, and ooops! the Great Depression, followed by WW2 and the post-war boom; the troubles of the late 60s, then 70s; the Reagan era, supply side tax cuts and the dotcom boom. For a while, people are diagnosed with something called “affluenza”. And finally, the 2008 crash happens and there’s all the angst over declining productivity and worries about skyrocketing debt.

The most impressive thing about this book in my view is the way an enormous amount of information, some of it arcane, is conveyed into a fast-paced narrative. This book is written very well and packed with anecdotes and even a bit of sly humour. There are some standouts: the book gives a marvelous account of the agricultural technologies and innovations that turned the Great Plains into the breadbasket of the world; its understanding of business models and mass production techniques is first class. It largely absolves the likes of Rockefeller, Carnegie and the rest of the “robber baron” tag and suggests that much anti-trust doctrine is bunk. Later, in discussing the present controversies over Facebook and other “Big Techs”, it is similarly sceptical about whether state bust-ups of such entities is a good idea.

The book points out how, by the late 19th Century, the US government was so small relative to today’s that the largest department of the Federal government was the Post Office. It generally praises the idea of the Gold Standard – Wooldridge and Greenspan are pretty rough on Bryan and others who think that printing money is a solution to economic problems. They are also pretty harsh on F D Roosevelt, pointing out that during the 1930s, unemployment averaged in the double-digit percentages, and that much of the New Deal was, on its stated terms, a failure. They give Roosevelt stick for his vindictive acts and foolish interventionism – they realise that his genius, if we can use that word, was inventing a myth about himself and in telling people that he was going to make sure everything was OK.

Needless to say, the narrative gets more awkward when it covers the period when Greenspan, a man who in his youth was an acolyte of Ayn Rand and an advocate of gold-backed money, became Fed chairman. The book argues (page 385) that critics cannot prove that the 2008 financial crisis can be blamed on loose monetary policy. Well, how jolly convenient! They say that the Fed’s ability to set interest rates, and influence borrowing costs for those with mortgages, etc, was largely restricted by the global “savings glut”. (I will come to this a bit later.) To a great extent, they blame the 2008 disaster on government-subsidised/supported sub-prime mortgages, excess confidence by bankers in risk models and the sheer complexity of financial products, such as in the derivatives markets. All these criticisms of the financial system prior to the collapse of Lehman Bros. in September 2008 look valid but there is also a problem.

A problem to overcome, the authors say, is how rising entitlement spending (Social Security, Medicare, Medicaid) has “crowded out” private savings and that, over a period of time, savings as a share of total GDP has declined. Coupled with this, and with rising regulation (which they rightly attack) has been less overall capital investment, leading to lower productivity growth. When people talk about “stagnant” wages, it is sub-par productivity that is largely to blame.

Okay, so low savings are a problem. If it is true that insufficient private sector savings is a problem to be fixed, how come the “glut” of savings in the years leading up to 2008 was a problem? If Chinese/other savers were pouring genuine savings (not central bank confetti) into the West, and investing in real capital, then why would this be an issue (other than a dislike of the origins of the savings)? When do we know that there is a “glut” of savings if, in other parts of the narrative, Greenspan/Wooldridge say there are insufficient savings because of a state “crowding out” effect? Of course, had Fed interest rates been higher than they were, yield-hungry Chinese savers might have put even money into the US, but then again it might have chilled the housing market enough to halt some of the damage.

Such points aside, Capitalism In America is a good study of some of the big shifts in the US economy since the Republic was born.

Samizdata quote of the day

In his 1968 book The Population Bomb, biologist Paul Ehrlich from Stanford University wrote that “The battle to feed all of humanity is over. In the 1970s hundreds of millions of people will starve to death in spite of any crash programs embarked upon now.” That year, food supply in 34 out of 152 countries surveyed amounted to less than 2,000 calories per person per day. That was true of only 2 out of 173 countries surveyed in 2013. Today famines have all but disappeared outside of war zones.

Marian Tupy

What do people think of Open Rights Group?

The White Paper expresses a clear desire for tech companies to “design in safety”. As the process of consultation now begins, we call on DCMS to “design in fundamental rights”. Freedom of expression is itself a framework, and must not be lightly glossed over. We welcome the opportunity to engage with DCMS further on this topic: before policy ideas become entrenched, the government should consider deeply whether these will truly achieve outcomes that are good for everyone.

– remarks by Jim Killock and Amy Shepherd on the ORG site.

Seems to me that ORG thinks the ‘Online Harms Strategy’ just needs to be written better rather than the very notion of the government poking its nose into the internet is an abomination that needs to die in a fire. I have not followed the ORG closely, so am I being unfairly critical? Perhaps I am just allergic to the incredibly dangerous ‘positive rights’ language I see in some ORG articles. Opinions?

The fall of the Temple of Reason

Terrible news from Paris of the fire at Notre-Dame Cathedral. As I write, I understand that not all is lost of this masterpiece. The collapsed spire was a 19th Century addition, but the damage must be immense.

When I was last in Paris, over a decade ago, I recall looking at Notre-Dame and shuddering as I thought of it as ‘destroyed’ (not that I believe that there are ‘holy’ places), as, during the French Revolution, it was closed as a cathedral and was declared a Temple of Reason. When egalitarians appeal to reason, you know heads will roll.

There followed years of neglect, before, AIUI, in 1905, the French State (which had assumed ownership), effectively provided the cathedral to the Catholic Church as a permanent ‘tenant’. The cause of the fire may well be nothing more sinister than incompetence, perhaps we will never know. I would like to think that commercial aviation levels of caution would go into fire precautions in such a building, (perhaps they did) which, whatever your view of the use or purpose of it, is surely one of the great buildings on Earth. However, the neglect under State ownership has continued, and yesterday’s cathedral was a revived corpse of the pre-Revolutionary building.

It is pretty shameful that neither Hitler nor the Kaiser managed to do as much damage to Notre Dame as the fire. It had survived them, and rioting Hugenots. In WW2, it was relatively unscathed. Some lost mediaeval glass was, I understand, replaced by abstract crap in the post-War period, so the scoundrels were already circling.

Perhaps the fire is a Randian moment, wasn’t there a train crash in a tunnel for which ‘no one is responsible’? Is the burning down of a ‘temple of reason’ an allegory for France after its great economists are all-but forgotten?

Does it matter if, in rebuilding Notre-Dame, stone that is geologically ancient is replaced by other just as ancient stone, carved a few mere centuries later? Should, as with the Campanile in Venice, the order be: ‘Com’era, Dov’era.‘. ‘How it was, where it was.‘?

Or will something more ‘inclusive’ replace it or be grated on to it?

The King of Spain is belatedly singeing many a landlord’s beard…

Mr Ed: This post is made on behalf of Paul Marks, the Sage of Kettering, as he appears to have some issues with posting. I have put my pennyworth in.

Centuries ago the Kings of Spain forbad landlords to remove tenants at the end of their tenancy contract (at least in Castile) – the Kings wanted to be seen as the “friends of the poor”. This was the true start of the decline of Castile and it spread to Latin America – where landlords just became interested in collecting-the-rent rather than improving their estates (as it was not lawful for them to remove tenants). Soon rents became “customary” – fixed under the “just price” doctrine, close kin of the “fair wage” doctrine.

Spain and Latin America lagged behind the Common Law world not because Spanish is somehow an inferior language to English – but because Spanish law became inferior to the Common Law which was based upon Freedom-of-Contract not “Social Justice” with its “just price”, “fair wage” and “security of tenure” (regardless of contract). The government of British Prime Minister Theresa May now seeks to copy the “Spanish Practices” of centuries ago – by making contracts meaningless. For example, if a tenant can not be removed after the term of their contract (their tenancy) is over then only a fool would let out a property in the first place. What is intended to “reduce homelessness” will end up increasing it.

Mr Ed: This piece on Conservativehome sets out the aptly-named Secretary of State’s view, Mr Brokenshire, he is indeed going to scour the Shires, and the towns and cities too. Someone said rent control was the second-surest way to destroy a city after carpet bombing.

James Brokenshire: Why we have decided to abolish no fault evictions

The legal position (England and, I think, Wales but it may be devolved) is not set out very well in the piece, so the explanation on the government’s website is here. Basically, the legal mechanism is a Section 21 notice, whereby a property owner can evict a tenant after a 6-month tenancy has ended, i.e. it has run its minimum term, or when it is of indefinite duration. This is to be abolished, leaving in place the much less effective Section 8 Notice, whereby tenants can play cat-and-mouse by not paying rent, then paying arrears and stopping an eviction, amongst other things.

Bastiat’s ‘What is seen and what is not seen’ might seem to be the issue here, but I fear that there are those who will not ‘see’ when it does not suit them, and unlike Nelson, it is from cowardice and calculation.

Of course, if the Sage is right, Mrs May is making England that little bit more like Venezuela, singeing Mr Corbyn’s beard and stealing his clothes.